Conclusion and Policy Recommendations

This report has found that Mexican immigration creates significant challenges for the United States. It has added significantly to the size of the poor and uninsured U.S. populations, as well as substantially added to the welfare caseload in the United States. For example, while Mexican immigrants and their young children comprise 4.2 percent of the nation’s total population, they comprise 10.2 percent of all persons in poverty. They also comprise 12.5 percent of those without health insurance. Perhaps most troubling, the findings show that the welfare use, income, and other measures of socio-economic status of legal Mexican immigrants do not converge with natives over time. Legal Mexican immigrants who have lived in the United States for many years do not enjoy a standard of living similar to that of natives. Their low incomes coupled with high use of means-tested programs create very significant fiscal costs for the country as well. Based on research by the National Academy of Sciences, the lifetime net fiscal drain (taxes paid minus services used) on public coffers created by the average adult Mexican immigrant is estimated to be more than $55,000. While employers may want increased access to unskilled Mexican labor, this cheap labor comes with a very high cost.

The primary reason why Mexican immigrants have not faired well is that a very large share have little formal education at time when the U.S. labor market increasingly rewards skilled workers, while offering very limited opportunities to the unskilled. The heavy concentration of Mexican immigrants at the bottom of the labor market also is likely to have a significant negative effect on wages for unskilled natives who are in direct competition with them. Mexican immigrants now comprise 22 percent of all the high school dropouts in the work force, while they comprise 1.5 percent of all workers with more than a high school education. Therefore, it is only the lowest-skilled workers who are adversely affected by Mexican immigration.

Because the vast majority of natives have completed high school and are employed in higher-skilled occupations, most natives do not face significant job competition from Mexican immigrants. However, there are more than 10 million adult native-born workers who lack a high school education in the U.S. workforce. Consistent with previous research, the results in this study indicate that these less-educated natives face significant job competition from Mexican immigrants. And those native-born workers adversely affected by Mexican immigration are among the poorest in the United States and are also disproportionately native-born minorities. Moreover, it is difficult to justify reducing the wages of unskilled workers since their wages, unlike those for other workers, actually declined in the 1990s, indicating that there is no shortage of high school dropouts in the United States.

Although reducing the wages for unskilled workers creates benefits for consumers, the benefits are estimated to be extremely small because wages paid to high school dropouts account for only a tiny fraction of the expenses incurred by employers. For example, high school dropouts are estimated to account for less than 3.72 percent of total cost to employers. Thus even if Mexican immigration reduced their wages by 10 percent, this would reduce consumers prices by less than four-tenths of one percent. And this is true only if employers pass on all of the saving to their customers. It is simply not possible for a technology-based economy such as the United States, in which skilled labor and capital comprise the overwhelming share of the economic output, to derive large benefits from unskilled immigration. Moreover, because it harms the poor and creates significant fiscal costs for taxpayers, it would seem to make far more sense to reduce Mexican immigration (legal and illegal) in the future and at the same time work to improve the skills of legal Mexican immigrants already here so as to facilitate their integration into American society.

Improving the Situation for Legal Mexican Immigrants. The findings in this report indicate that the primary reason for the higher rates of poverty, welfare use, lack of health insurance coverage, and the large fiscal costs Mexican immigrants impose on taxpayers stem largely from the fact that most have little formal education. Since the long-term trend of increasing wages for skilled workers while declining or stagnant wages for the unskilled is likely to continue, the most obvious means to improve the situation for Mexican immigrants already here would be to increase their skills. Our efforts to integrate Mexican immigrants into the economic mainstream should therefore focus on job retraining and other efforts designed to improve their ability to compete in the modern American economy. Increasing their ability to compete in the labor market by improving their job skills would not only improve their economic situation, it would reduce the fiscal costs they impose on taxpayers. Related to these efforts, more resources should also be devoted to increasing Mexican immigrants’ familiarity with their new country. This may include public/private partnerships for adult education programs designed to increase knowledge of English and the U.S. job market. Perhaps most important, a greater effort must be made to improve public education in areas of heavy immigrant settlement to ensure that the lower education level of Mexican immigrants does not persist through the generations. Clearly, the success of the millions of Mexican immigrants and their children who now live in the United States is important not only to their future but also important to the future of the country as a whole.

Reducing Future Unskilled Legal Mexican Immigration. In most years, more than 90 percent of visas allotted to Mexican immigrants go to the family members of U.S. citizens and non-citizen lawful permanent residents (LPRs). Of course, immigration policy should not be changed in order to reduce Mexican immigration specifically; rather it should be changed to reduce unskilled immigration in general. Any change would have to apply to all countries — not just Mexico. By limiting which relatives are eligible for admission, we could reduce the number of immigrants who are admitted without regard to their skills. The Commission on Immigration Reform chaired by the late Barbra Jordan suggested limiting family immigration to the spouses, minor children, and parents of citizens and the spouses and minor children of LPRs, eliminating the preferences for adult children and siblings. The preference for the spouses and children of non-citizens should also probably be eliminated, since these provisions apply to family members acquired after the alien has received a green card, but before he or she has become a citizen.31 If the parents of citizens were also eliminated as a category, family immigration from Mexico would be reduced by more than half to roughly 50,000 or 60,000 a year. Changing legal immigration in this way would significantly reduce the number of legal immigrants from both Mexico and other countries admitted in the future without regard to their ability to compete in the modern U.S. economy.

Reducing Future Illegal Mexican Immigration. Reducing illegal immigration should also be made a much higher national priority. The analysis done here indicates that there are at least 3 million and perhaps closer to 4 million illegal aliens from Mexico living in the United States. Illegal immigration from Mexico has added significantly to the size of the poor and uninsured populations in the United States. Because they receive benefits on behalf of their native-born children, illegal immigrants have also added to the welfare caseload. But perhaps most important, in a nation based on the rule of law, it should not be acceptable to have millions of people living in the country without permission.

Among those who study the issue, there is broad agreement that cutting illegal immigrants off from jobs offers the best hope of reducing illegal immigration. Since 1986, it has been unlawful to employ illegal aliens. To date, however, worksite enforcement efforts have been ineffective. Three steps are needed to make worksite enforcement more effective: First, a national computerized system that allows employers to verify that persons are legally entitled to work in the United States needs to be implemented. Tests of such systems have generally been well received by employers. Second, the Immigration and Nationalization Service (INS) must significantly increase worksite enforcement efforts. Congress has repeatedly failed to increase funding for worksite enforcement, even though the INS continues to ask for more agents. Third, more needs to be done at the border. Despite increases in funding over the last few years, efforts along the southern border remain grossly inadequate. A real effort to control the border with Mexico would require perhaps 20,000 agents and the development of a system of formidable fences and other barriers along those parts of the border used for illegal crossings.

The cuts in legal immigration proposed earlier would also go a long way toward reducing illegal immigration in the long run because the current system of legal immigration creates a strong incentive to come illegally. There are approximately four million people qualified for immigration to the United States but who are waiting their turn to receive the limited number of visas available each year in the various family categories. Such a system encourages those who have been selected, but have to wait, to simply come to the United States and settle illegally in anticipation of the day they are granted visas. Eliminating the sibling and adult children categories would alleviate this situation by doing away with the huge waiting lists. In addition to reducing the incentive to come before a green card is issued, cuts in legal immigration would also be very helpful in controlling illegal immigration because communities of recent immigrants serve as magnets for illegal immigration, providing housing, jobs, and entree to America for illegals from the same country. It is no coincidence that the top immigrant-sending countries are also the top countries in sending illegal immigrants to the United States. Sociological research shows that one of the primary factors influencing a person’s decision to emigrate is whether a family member or member of their community has already come to United States.32 Thus, allowing in large numbers of legal immigrants is one of the leading causes of large-scale illegal immigration.

Guestworker Programs Do Not Solve the Problem. While some may favor guestworker programs in an effort to have access to immigrant labor without the fiscal costs, the heavy use of means-tested programs by the families of illegal aliens shows that this is unlikely to work. While illegals are generally barred from using means-tested programs, this has not prevented them from making use of such programs because they typically receive welfare on behalf of their the U.S.-born children, who have eligibility like any other native. Moreover, the negative fiscal effect of Mexican immigration is not simply a result of the immigrants’ heavy use of means-tested programs; it is also caused by their much lower incomes and resulting lower tax payments. Because the primary reason for their low incomes is that so many are unskilled and this fact would not be changed by making them guestworkers, a new guestworker program is likely to impose significant costs on American taxpayers. It is simply not possible to bring in large numbers of unskilled workers — whether they come illegally, as legal immigrants, or as guestworkers — without creating significant fiscal costs. In addition, by increasing the supply of unskilled workers, guestworkers would still adversely affect the wages of natives and immigrants already here working in low-wage, unskilled jobs. And these workers already have the lowest incomes and highest unemployment rates. Finally, it is worth considering that in every country that has attempted to have a guestworker program, it has always resulted in permanent immigration. As one commentator has observed, "there is nothing more permanent than a temporary worker."

Arguments in Favor of Mexican Immigration. The findings in this report indicate that if the United States wishes to pursue its national interests, then reducing immigration from Mexico would make a great deal of sense. However, there are other arguments that could be marshaled in support of continued high levels of immigration from Mexico. First, there is simple altruism. If this is to be the argument for Mexican immigration, then policy makers and others need to make it clear to the American public that although Mexican immigration imposes very real costs on taxpayers and especially on the working poor, the costs incurred are necessary in order to give some fraction of the Mexican population a chance at a better life. Failure to acknowledge the costs is likely to invoke a very negative reaction from the public as they become aware of the problems created by Mexican immigration. Additionally, once we make the benefits for foreign citizens the justification, immigration in effect becomes a foreign aid program. As such, the costs of Mexican immigration to taxpayers need to be evaluated like any other foreign aid program. It seems very likely that such an evaluation would find that allowing a small share of Mexico’s population into the United States each year is not the most cost-effective way of helping people in Mexico. It would probably make more sense to provide various forms of development assistance to that country, thereby reaching a much larger share of its population.

A second argument for Mexican immigration combines altruism with practical considerations about the need for the United States to act as an "escape valve" for Mexico. It is often suggested that because Mexico finds it difficult to meet the employment and other needs of its own people, the United States should allow in immigrants to prevent social discontent from possibly destabilizing Mexico. Of course, there is a very strong counter position which points out that by providing an escape valve, the United States may in fact reduce pressures for change in Mexico, thereby hindering its development. But again, if the escape valve argument is to be the primary justification for Mexican immigration, policy makers in the United States need to honestly acknowledge the costs to the American people.

Another argument is that United States simply cannot control illegal immigration at a reasonable cost. This argument is partly the reason why many in Congress wish to legalize illegal aliens already here and/or create a new guestworker program. Of course, the primary problem with this argument is that, at present, it is entirely undemonstrated. Partly at the behest of the business community, Congress has chosen not to take even the most elementary steps necessary to reduce illegal immigration, such as creating a computerized system to allow employers to verify the legal status of all new hires or allocating the necessary funds so that the INS can hire the worksite inspectors it needs. Even when the INS has tried to stop the employment of illegals, Congress has intervened to prevent it from enforcing the law.33 Based on the available evidence, it is simply not possible to argue that illegal immigration from Mexico cannot be reduced. If policy makers decide that the costs are indeed too high, such a determination must also be accompanied by an honest public discussion about the enormous costs of unskilled immigration.

Final Thoughts. Because the two countries share a 2000-mile border, there can be no doubt that the futures of Mexico and the United States are intimately bound together for all time. While migration is only one of the many issues affecting the two countries, it is perhaps the most intractable because the interests of the two countries do not coincide. Whereas the Mexican government has made clear its desire that more immigrants be allowed to come north, the available data suggest that the costs to the United States clearly outweigh the benefits. Therefore, finding common ground on the issue will be extremely difficult. While no one debates the right of the United States to decide who may immigrate, pursuing its national interests by reducing unskilled immigration from Mexico may adversely affect relations with Mexico. However, there are many other important issues such as trade, investment, the environment, and drug interdiction on which the interests of the two countries do coincide and therefore a strong working relationship is likely to continue.

Putting aside the effect on U.S.-Mexico relations, the political situation within the United States also makes it difficult for the country to pursue its national interests. Even though economic analysis indicates that it is simply not possible for unskilled immigration from Mexico to create significant benefits for United States, those businesses that rely on unskilled labor will likely fight very hard to make sure that there is an abundant supply of such labor in order to keep down their labor costs. Mexican immigration, in effect, acts as a subsidy for employers who use unskilled, low-wage labor. The fact that many Mexican families are dependent on taxpayers to provide means-tested programs, and that Mexican immigration contributes to school overcrowding and drives down wages for the working poor, is not something employers take into account. The costs are diffuse, borne by all taxpayers, while employers have a very strong incentive to minimize their labor costs. By providing food stamps, free school lunches, Medicaid, the EITC, and other programs, taxpayers are in effect paying part of the salary for these workers. This is an extremely desirable situation for employers, and like any business receiving a subsidy, those who use unskilled labor will try very hard to retain the subsidy. The fact that some businesses wish to retain this subsidy cannot, however, justify the costs to taxpayers, the dramatic increase in poverty it creates, or the reduction in wages for the poorest American workers. Therefore, political leadership needs to acknowledge these problems and work to lower the level of unskilled immigration from Mexico. Equally important, policy makers should also devote considerable attention to the plight of legal Mexican immigrants and their young children already here.

End Notes

31 There is currently a large backlog of persons waiting to enter in the spouses and minor children of Lawful Permanent Residents category. A significant portion of these individuals are the family members of IRCA amnesty beneficiaries. It seems unwise to continue to separate these families. Therefore, it would make sense to grandfather in those already on the waiting list. However, no future applications would be taken for the spouses and minor children of LPRs.

33 In 1998, INS raids in Georgia caused the illegal workers picking Vidalia onions to flee. By the end of the week, both of the state’s senators and three representatives sent a scathing letter to the Attorney General protesting, "the lack of regard for farmers." In 1999, when the INS focused on meat-packing plants in Nebraska, the political reaction was very similar and the INS again stopped its enforcement efforts.

The Center for Immigration Studies is an independent, non-partisan, non-profit research organization founded in 1985.
It is the nation's only think tank devoted exclusively to research and policy analysis of the economic, social, demographic,
fiscal, and other impacts of immigration on the United States.